I first blog on the Hire Purchase Act (1967) ("HP Act") amendments on 6 July 2010 at HERE when the bill was passed by parliament. HP Act is under the purview of the Ministry of Domestic Trade, Co-operative and Consumerism.
1. The first action taken by PROTON EDAR dealers nationwide was to burn and throw all blank hire-purchase documents/agreements from any banks. When the new law take effect on 15 June 2011 onward, it will be an offense for any party to be in possession of a blank & incomplete hire-purchase agreement. [Paragraph 4B (2A)].
It is now an offense under the new HP Act to ask Car Buyer to sign a blank or incomplete Hire-Purchase agreement or any form(s) or document(s) related to the Hire Purchase agreement.
2. Have you ever had any experience where your car registration card (vehicle JPJ grant or registration book) was held by the bank and when you request to take the grant out from the Bank to renew the Road Tax or for whatever reason, you were prohibited by Banks. This is common when your monthly payment is in arrears.
Worst, you had to drive a car with an expired Road tax and/or pay RM10 to RM15 to Banks as a service fee to have them renew your road tax for you.
Under the new Law [Section 4E (1), Section 4E (2)] if the Bank refused to give the JPJ registration card to the customer, the Bank is gulty of an offense under this Act!!! Meaning, you CAN REQUEST TO HOLD THE JPJ GRANT/REGISTRATION CARD and the Bank HAVE TO give it to you!
3. Have you ever felt cheated when you bought a second hand car and the specification of the car does not conform to the original structure of the same model (Kereta Potong or sambung balik?) or a 1.8cc car modified into a 2.0 car?
Under the new Law [Section 4F (1)] if there was any alteration or modification to the motor vehicle at the point of signing the Hire purchase agreement, then the hire purchase agreement shall be deemed void!!
Does that mean, the Bank officer had to inspect and cite the actual vehicle and confirm its originality condition before preparing the hire purchase agreement? If we follow the new law word by word, then the answer is yes? does bank officer has all the time to inspect all the cars before preparation? the answer is NO. Will this process delay the processing and transaction? the answer is Yes.
4. Have you ever bought a second hand vehicle and end up paying thousands of ringgit to repair the vehicle due to defective parts and/or components which you never knew existed before the purchase?
Under the new Law [Section 4G(1)] the seller have to declare in writing any 'defects' on the second hand vehicle in accordance with an inspection report conducted by the Ministry's approved body (currently, only Puspakom is authorized to perform the inspection)
Defect as define by the Law includes defect to the mechanical or operational system, construction, structure and build up and fittings of the vehicle.
5. Have you ever been followed, approached and intimidated by hooligans whom claimed they are bank's representative to repossessed your car for late payment of the monthly loan repayment? These repossessors would stopped you at traffic lights, break into your house compound and tow your car away, follow and harrass you at work and home etc....
REPOSSESSIONS!!
Under the new law (Section 16 (1)), Banks can repossess the car (for arrears in monthly loan repayment) if the total payments made (for the car under HP) is less than 2/3 of the total cash price, 2 months consecutive arrears in loan repayment and Bank has served the buyer a notice, in writing, 21 days before repossessing the car.
If the total payment for the car is more than 2/3 of the total cash price, the Banks must obtained an order of the court. (Section 16 (1a). With the Court order, a notice must be serve within 21 days before the car can be repossessed [Section 16 (1b)]
Hooligans will removed from the system when repossessors must now apply for permit from the Controller. If there still exist Hooligans and gangster repossessing cars, then the Controller must be removed and replaced!!? Only the Controller can issue the repossessor permit. [Section 17A (1)]
6. Ever had any difficulty with getting a refund for booking fees paid to car dealer for whatever reason?
BOOKING FEE!!!
Under the new law (Section 30A), Car buyer DO NOT need to pay any booking fee when booking for car!!! Booking Fee can only be paid once the Second Schedule (Part 1 & Part 2) is served. Common practice now, Bank will not issue the Second schedule (Part 1 & Part 2) before the hire purchase loan has been approved!! So CAR BUYER ONLY NEED TO PAY booking fee once their loan has been approved.
Amount of booking fees to be paid is a maximum 1% of the vehicle-On-The-Road Price [Section 30A (2)] and shall form part of the deposit for the car [Section 30A (3)]. If the booking is cancelled or withdrawn 90% of the booking fees shall be refunded [Section 30A (4)].
There are a few set-back to car buyer with this new law. (1) Buyer may missed the promotion launched when their loan took an average 7 days for approval. (2) Buyer will only join the "wait-list" when booking fees is paid. (3) When stocks of cars are limited, buyer may missed the promotion. (4) Longer processing period. (5) More visit to Banks and dealers.
DOWNPAYMENT!!!
7. Customer NEED to pay full downpayment ONLY when the Hire purchase agreement is signed [Section 31 (1A)] and if the seller failed to deliver the car, then the downpayment must be refunded in full to the customer.
PENALTY!!!
Any person who contravenes any part of this Law, will be subjected to the following penalty!!!
8. Penalty imposed to Banks and/or dealers - RM100,000 for first offense & RM250,000 for second offense and so forth!!! [Section 46 (1)]
9. Sales Advisor, Officer, Manager, Director of banks and car dealers - RM25,000 for first offense or 3 years imprisonment & RM50,000 for second offense or so forth or 5 years imprisonment [Section 46 (1) (b), Section 46 (2)].
What is PROTON EDAR DEALER'S ASSOCIATION STAND? Click HERE.
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